Perdue, GOP set stage for NC session in speeches

North Carolina Gov. Beverly Perdue delivers her State of the State address before a joint session of the North Carolina General Assembly in the House chamber in Raleigh, N.C., Monday, Feb. 14, 2011. (Gerry Broome)

February 15, 2011 5:00:11 AM PST
Democratic Gov. Beverly Perdue told a Republican-controlled Legislature on Monday that she'll offer a budget proposal this week to pay for every current state-funded position in public schools while reducing corporate tax rates to the lowest in the Southeast. Click her to watch the raw video of the speech

In her second State of the State address before a joint session of the Legislature, Perdue said she wants to lower the corporate tax rate from 6.9 percent to 4.9 percent while offering more robust incentives for small business and "green" industries.

She said the state is recovering from the economic woes it faced a year ago, but still needs to be more competitive when fighting with other states and countries to recruit new industries.

"Right now, we have the highest corporate tax rate in the Southeast. That means our businesses are paying more taxes when they could be creating jobs," Perdue said. "That's a strike against us from Day One as we work to convince businesses that North Carolina is the best value."

The incumbent said little about what kind of spending cuts she'll offer except for a previously announced government reorganization that could reduce the number of state agencies from 14 to eight. She also said she'd offer an early retirement package that could cut eliminate 1,000 positions. Perdue said next year's projected budget gap, which was estimated at $3.7 billion earlier this year and $2.7 billion just last week, is now at $2.4 billion.

She didn't explain how the proposed gap had fallen further, or whether she would propose extending a pair of temporary taxes set to expire this week to generate $1.3 billion in more revenues. Republicans have said they're committed to letting the taxes expire.

Still, Perdue told the General Assembly meeting in the House chamber that the state is doing better than it was two years ago. She said businesses have pledged to create 58,000 jobs and are investing $12.5 billion in the state.

"We began systematically, one day at a time, to overcome whatever the global recession threw at us," Perdue said. "We squared up and put the bat to our shoulder, and swung hard. And two years later, North Carolina is winning this game."

Perdue arrived at the Legislative Building already at odds with the new GOP majority, which controls both chambers for the first time since 1870, on spending and savings less than three weeks into this year's session. Senate leader Phil Berger, R-Rockingham, was slated to give the Republican response immediately after Perdue's speech on the Senate floor.

Aspirations of cooperation between Republican leaders and Perdue eroded quickly when the Legislature began in late January. She and the GOP have been scrapping verbally over a bill given final approval last week that would take money away from some economic incentives programs to close next year's expected shortfall, raising questions about a possible veto by Perdue.

Perdue said business incentives are needed to "convince companies that the Tar Heel state deserves our reputation as the best place in the nation to do business."

Perdue said in prepared remarks her budget would "fund every current state-supported teacher and teaching assistant position" and won't back down from her priorities to protect education and create jobs and make government more efficient.

"There is one thing I will not do -- I will not sacrifice our children's future," Perdue said in prepared remarks. "I will not play partisan politics, and I will reach across the aisle to find compromise. I will sacrifice some of my goals if it means protecting our children's education and growing new jobs."

Perdue also said she would attempt to develop an initiative she pushed in her 2008 gubernatorial campaign that would allow a high school junior who meets academic and other criteria to be eligible to get a two-year associate's degree at no cost.

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